Travel is back on the agenda after a Covid-19 hiatus, and today a mobile startup is announcing a healthy round of funding to capitalize on that. Airalo — which uses software-based eSIM connectivity to provide a wide range of lower-cost mobile data packages, nearly 700 in all, for international travellers — has raised $60 million in a Series B round that it will be using to expand its business.

The all-equity round, values Airalo at $250 million post-money, includes a long list of financial and strategic backers, a mix that speaks to who works with the startup as a business partner as a complement to their own direct operations.

e& Capital, the venture arm of e& (better known as the UAE-based carrier Etisalat), is leading the round with participation also from startup incubator Antler Elevate, Liberty Global, Rakuten Capital, Singtel Innov8, Surge (the early-stage fund run by Peak XV, formerly known as Sequoia Capital India and SEA), Orange, T.Capital (the venture arm of Deutsche Telecom), KPN Ventures, Telefónica Ventures, I2BF Global Ventures, GO Ventures, and LG Technology Ventures. This fundraise is a big step up for the company, which had previously raised just $7.3 million.

Although Airalo’s only just closed the round, the company is currently on a strong growth rate — 20% revenue growth month on month, with nearly 1 million downloads monthly for the past three months. And from what we understand, that’s leading to further interest from other potential investors. There are already discussions to bring extra backers on at a considerably higher valuation of between $800 million and $1 billion.

Launched in 2019, Airalo is one of a group eSIM providers that have received an injection of life thanks to handset makers like Apple promoting the software-based standard as an easier way for users to move from one mobile carrier to another, doing away with requiring customers to physically change the small SIM card in their phones.

eSIM has been both a blessing and curse: it means carriers might have a better chance of wooing away customers from their current providers, but it also means it’s harder to lock in the customers they have. Overall, for consumers it’s a huge win, since it means mobile operators have to be a lot more creative and competitive to win business.

And that’s where Airalo has been showing promise. After a very slow start due to the pandemic when COO Abraham Burak said growth basically “stalled” for two years, it started to pick up momentum in 2022.

Although carriers these days have become more savvy with building and offering travellers more cost-effective mobile data plans, many of these tend not to be as flexible, and thus cheap, as what consumers want or need. eSIM offerings promise an alternative: more granular offerings at smaller pricing increments.

Currently Airalo says that it has 5.1 million customers buying its eSIM products. These products are presented in a matrix of combinations covering some 200 countries, geographic regions, service durations, and data package sizes — in all currently totally 689 different combinations.

“We are seeing exponential growth in sign ups because travel is picking up,” said Burak, who co-founded the company with Bahadir Ozdemir (the CEO).

Burak and Airalo overall refers to this matrix of eSIM plans as its “marketplace”. That appears not to be a reference to multiple eSIM providers — Airalo is the only one selling to users — but to the large bazaar of carriers and carrier plans underpinning the deals.

Behind the scenes, Airalo builds out its many eSIM options by way of a network of carrier agreements that it brokers and then stitches together across the globe, some involving direct capacity purchased on a wholesale basis, and others involving reselling international roaming plans already structured by individual mobile carriers. Airalo has also built technology that measures demand and corresponding costs and pricing for these different eSIM packages.

If you are asking yourself, why would a carrier work with a third party like Airalo, which might compete directly against it? It’s for the same reason that a brand might sell through many retailers while also selling goods directly through its own-branded storefronts: if a customer is already looking somewhere else for a good mobile roaming plan before travelling, chances are the carrier has already lost that customer. Cutting a deal with Airalo gives that carrier a chance — albeit one at a smaller margin — to still win some business.

It’s enough of an opportunity that Burak said that there have been acquisition approaches already from the carrier world.

That’s not to say that all eSIM providers are swimming in opportunity, or necessarily capitalizing on it just yet.

Another big name in the space, Truphone, which had raised hundreds of millions of dollars, recently faced a period of significant turbulence when its biggest shareholder, Roman Abramovich, was slapped with international sanctions over his connections to Russia and he and other Russian shareholders were forced to sell their holdings in the company. Despite some very interesting deals it had on the books including services to banks and a partnership with Apple, Truphone had never made a profit in 15 years of operations, so its sale and its future definitely looked uncertain.

It look almost a whole year, but in the end Truphone was sold for £1 to two entrepreneurs, German businessman and tech entrepreneur Hakan Koç and former telecoms executive and private equity investor Pyrros Koussios, who pledged to invest more into the business and to expand the kinds of services it offers to enterprise customers.

(Indeed, stitching together data connectivity as an eSIM provider is not that far in concept from privacy-focused VPNs, which is something Truphone was already building for business customers, and may have been one of the interesting services that caught the eye of its Russian oligarch former owners.)

On that note, the idea of expanding what else an eSIM company can be providing to its customers beyond basic data is something that it seems Airalo is also taking on board, too. One new service it will be using the funding to help introduce is “Airalo Partners,” which it describes as “an innovative connectivity solution tailored to businesses and organizations across the globe.”

UAE has a number of international expat residents and itself has a population that is widely travelled, so it makes sense that an eSIM provider caught e&’s eye as an interesting investment opportunity.

“We are pleased to lead the Series B financing round for Airalo, a company that has come a long way over the past 18 months with a focus on providing exceptional customer experience,” said Kushal Shah, managing director, e& capital, in a statement. “We have complete confidence in Airalo’s ability to expand its user community, strengthen its diverse team, and introduce its latest product Airalo Partners, a groundbreaking connectivity solution for global businesses and organizations. We believe that Airalo has the potential to become a travel essential and are excited to support their journey towards becoming the definitive gateway to instant connectivity worldwide.”